Expected utility paradoxes

The expected utility (EU) model is widely used for predicting and describing choices under uncertainty. Its usefulness, however, is limited because of its widely acknowledged inconsistencies and paradoxes. This paper describes how important EU model paradoxes can be resolved by accounting for the influences of socio-emotional goods (SEGs) embedded in word and other symbolic frames.     

Interpersonal utility theory

A triangulation strategy is sketched for constructing an empirical testable theory of interpersonal comparisons of utility units. Bargaining theory and the theory of the utility curves of money are tentatively suggested as triangulation points.During 1981–82, I presented these ideas in talks at Chicago, Michigan, Oberlin, Princeton, Stanford and Yale. I have benefitted from the comments I received then as well as from comments of the referees.     

On interpersonal utility comparisons

This paper argues that interpersonal comparisons of utility levels are difficult in principle and that interpersonal comparisons of utility differences can also hardly be defined based solely on individual choice behavior.The author is indebted to Professor M. Wooders for detailed comments on an earlier draft and to Professor R. Selten, M. Shubik, Y. Ito, K. Kamiyama and H. Atsumi for helpful discussions. He also thanks Professors L. Gevers, Y. K. Ng and a referee of this journal for valuable comments on earlier drafts.     

Non-expected utility maximizers behave as if expected utility maximizers: An experimental test

We investigate the behaviors of subjects who either do or do not adhere to the expected utility theory using the Becker–DeGroot–Marschak (BDM) method. We directly examine the validity of the expected utility theory in order to distinguish subjects into two groups: those who adhere to the expected utility theory (expected utility maximizers) and those who do not adhere to it (non-expected utility maximizers), and then execute the BDM experiment in the both groups. We find that the differences in the stated prices between the expected and non-expected utility maximizers are not significant. This result implies practical usefulness for the BDM method.     

Finite sensibility and utility functions

According to the concept of finite sensibility an individual utility function has to fulfill Ng's (1975) Convention 1. In this paper we show that relatively weak assumptions already guarantee the existence of a utility function with the desired property and we present a procedure for constructing such a utility function.     

Objective interpersonal comparisons of utility

 This paper examines the problem of distilling conflicting interpersonal comparisons into a single set of interpersonal comparisons. The mapping that achieves this has a richer co-domain than all social choice problems (and a richer domain than most social choice problems). The set of mappings satisfying a mild set of restrictions is very small. If interpersonal comparisons embody ratio-scale comparability then the mapping is Cobb–Douglas in form; if interpersonal comparisons embody no more than level and difference comparability then the mapping must be dictatorial and it is impossible to combine different interpersonal comparisons. Received: 16 February 1995/Accepted: 13 October 1995     

The "More for Less" Paradox: Public Attitudes on Taxing and Spending

Using a statewide random sample of over 900 respondents, attitudestoward taxing and spending are examined in order to try to explainthe seeming paradox of a public that wants more spending butless taxation. We investigate the possibility that the publicwhich wants more spending is willing to pay for it by meansother than taxes, such as through reallocation or increasednontax revenue. Moderate support for this expectation is found.Overall, the desire fora "free lunch" is not as widespread asa simple comparison of taxing and spending preferences suggests.     

The model of place utility revisited

"The purpose of this paper...is twofold: first, to specify a way of calculating place utility so that potential migrants could move to the place where overall place utility is maximized; and second, which is more important, to reveal how decision-makers in the real world, who are acting within 'bounded rationalities'...,make their decisions on where to migrate. This study is supported by an empirical survey of recent Chinese immigrants to Edmonton [Canada].... The findings reveal that when people evaluate different places, they do not necessarily look for the one that generates the highest overall value or utility across all properties.... The study further indicates that the assumption underlying most microeconomic models (that maximizing utility or benefit is the ultimate rule for choosing one location out of several) has not been verified." (SUMMARY IN FRE AND SPA)     

Consumption theory with reference dependent utility

This paper presents a closed form consumption function for an individual when his utility depends both on his own current and previous consumption and on the consumption by his relevant others. Given this model, I argue that we can introduce an alternative definition of marginal propensity to consume (MPC) in addition to the traditional definition. This alternative definition can be called the individual’s total MPC, which I show is smaller than the traditional MPC.     

On intra- and interpersonal utility comparisons

In this paper, it is suggested to formulate assumptions on the comparability of individual utilities in terms of meaningful statements rather than using the usual way of defining such assumptions by means of certain sets of admissible transformations. Various assumptions involving intra- and interpersonal comparisons of utility levels and utility differences are introduced in terms of meaningful statements and compared to their traditional counterparts. It is shown that these two approaches are, in general, not equivalent. In a social choice framework, it is demonstrated that the difference between these approaches can be quite substantial: replacing the usual cardinal unit comparability assumption by a condition involving comparisons of utility differences which is similar in spirit turns a well-known characterization of the utilitarian social welfare functional into an impossibility theorem.I am indebted to Charles Blackorby, David Donaldson, Michel Le Breton, and John Weymark for very helpful discussions and comments on an earlier version of the paper. The suggestions of two anonymous referees enabled me to improve the paper considerably.     

Continuity of utility functions representing fuzzy preferences

In a previous paper, we established necessary and sufficient conditions for a given binary fuzzy relation to be representable by a utility function. In this article, we construct a crisp order topology associated to a given weakly complete fuzzy pre-order and introduce the notion of “continuous fuzzy pre-order.” We show that this new condition and the conditions introduced in the previous paper are together necessary and sufficient for a numerical representation of a given weakly complete fuzzy pre-order by a continuous utility function.     

Social choice with independent subgroup utility scales

In this article, the kinds of utility comparisons that can be made may differ in distinct population subgroups. Within each subgroup, utility is either ordinally or cardinally measurable. Levels and differences of utility may or may not be interpersonally comparable within a subgroup. No utility comparisons are possible between subgroups. Given these informational assumptions, it is shown that any continuous social welfare ordering that satisfies the weak Pareto principle only depends on the utilities of one of the subgroups. The class of social welfare orderings consistent with these assumptions is determined by the scale type of the dictatorial subgroup. Received: 25 May 1999/Accepted: 4 November 1999     

Empirical testing of the expected utility model

Suppose an individual is faced with a set of alternatives with uncertain money outcomes, then according to the expected utilily moded the alternative with the highest cxpected utility will be chosen. In the present paper this model is tested against the more general model given by Kahneman and Iversky (1979) and others. As contrasted with usual practice, the test is based on an exogenously measured utility function. The result of the test is that the expected utility model has to be rejected, both for a concavee and for an S-shaped specification of the utility function. The subjective evaluation of an objectve probability of 0.5 is in this study estimated at a value of 0.45 or 0.47. depending on the functional specification used.Our main conclusion is that although the hypotlicsis of expected utility has to be rejected, for practical purposes the difference between 0.5 and 0.45 (0.47) is so slight, that the hypothesis is a good working approximation. We do not know whether this remains true for valus of the objective probability considerably different from 0.5.     

Evaluating utility conservation programs: The BPA plan

This paper summarizes a detailed plan for evaluation of the residential energy conservation programs offered by the Bonneville Power Administration (BPA). The major purpose of the evaluation is to determine the energy savings attributable to the programs and to identify differences between program participants and nonparticipants. The focus of this paper is on the sampling issues associated with reliable estimates of energy savings. The methodology attempts to correct for the self-selection bias likely to occur in conservation program evaluation by using intentional nonrandom sampling. In addition, the paper suggests a variety of analytical approaches to analyzing the data with respect to energy savings.The proposed design, using four different groups to estimate program effects, is a comprehensive endeavor. This is appropriate for BPA because of the substantial investment it is making in conservation. However, the design is flexible and allows for use offewer groups to reduce evaluation costs.     

Framing Black women: The utility of knowledge

This article reviews the literature on the socially constructed knowledge or myths about Black women by placing it within a cultural context. I identify three domains of research within this field. The first is the cultural production of socially constructed mythologies of Black women throughout various historical epochs, which includes an analysis of books, journals, scientific/medical documents, images, and other cultural products. I focus on two primary categories of stereotypes found in the literature: 1.) the myth of pathology and primitiveness and 2.) the myth of antithetical womanhood. The second is the utility of cultural knowledge—which is to control and regulate culture and to justify and establish particular types of norms, preferences, laws, policies, and practices within society. Lastly, I will discuss the resistance culture of Black women, which developed in response to stereotypical perceptions created about them.     

The poverty of growth with interdependent utility functions

We argue that with interdependent utility functions growth can lead to a decline in total welfare of a society if the gains from growth are sufficiently unequally distributed in the presence of negative externalities in consumption, i.e. envy.     

A linear algebra approach to non-transitive expected utility

The purpose of this paper is twofold. One of the aims is to give a view of P. C. Fishburn's non-transitive expected utility through geometric linear algebra. The other is to give an application of these ideas to a social choice problem. Actually, the problem under consideration arises from the theory of dynamical systems of structures in a society as studied in [All] and [Om1]. A variation of this model as presented in [Om2] leads to the problem of how macro structures of a society form coalitions. Their possible irrational behaviour may be treated using non-transitive expected utility. Received: 14 February 1996/Accepted: 22 January 1997